Question

Juniper Company uses a perpetual inventory system and the gross method of accounting for purchases. The company purchased $9,750 of merchandise on August 7 with terms 1/10, n/30. On August 11, it returned $1,500 worth of merchandise. On August 26, it paid the full amount due. The correct journal entry to record the merchandise return on August 11 is:

Answer 1

Answer:

The journal entries are as follows:

(i) On August 7,

Merchandise inventory A/c Dr. $9,750

           To accounts payable A/c           $9,750

(To record the purchase of merchandise on account)

(ii) On August 11,

Accounts payable A/c Dr. $1,500

         To merchandise inventory A/c $1,500

(To record the merchandise return)

(iii) On August 26,

Accounts payable A/c ($9,750 - $1,500) Dr. $8,250

        To cash A/c                                                         $8,250

(To record the payment in cash)